UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from_____to _____ Commission file number: 001-34822 ClearPoint Neuro, Inc. (Exact Name of Registrant as Specified in Its Charter) Delaware 58-2394628 (State or ...

[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents the company's condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Financial Statements](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) The financial statements for June 30, 2021, reflect increased assets and revenue, driven by a public offering, despite widening net losses from higher operating expenses [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a substantial increase in total assets and cash, primarily from a public offering, leading to a significant improvement in stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 (Unaudited) | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $61,524 | $20,099 | | Total current assets | $68,509 | $25,462 | | Total assets | $72,326 | $29,518 | | **Liabilities & Equity** | | | | Total liabilities | $24,360 | $27,141 | | Total stockholders' equity | $47,966 | $2,377 | | Total liabilities and stockholders' equity | $72,326 | $29,518 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Revenue increased for both three and six-month periods, but net losses widened significantly due to higher operating expenses, particularly in R&D Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2021 | Q2 2020 | Six Months 2021 | Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $3,413 | $2,478 | $7,443 | $5,593 | | Gross profit | $2,290 | $1,676 | $4,904 | $3,860 | | Operating loss | $(3,407) | $(1,475) | $(5,588) | $(2,684) | | Net loss | $(3,743) | $(1,661) | $(6,281) | $(3,716) | | Net loss per share | $(0.17) | $(0.11) | $(0.31) | $(0.24) | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' equity significantly increased due to net proceeds from a public offering and convertible note conversion, despite a net loss - A public offering of common stock in the first half of 2021 raised approximately **$46.8 million**[24](index=24&type=chunk) - A **$7.5 million** principal amount of the 2020 senior secured convertible note was converted into approximately **1.26 million** shares of common stock[24](index=24&type=chunk)[30](index=30&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash increased significantly due to substantial financing activities, primarily a public stock offering, offsetting cash used in operations Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Category | 2021 | 2020 | | :--- | :--- | :--- | | Net cash from operating activities | $(5,849) | $(4,039) | | Net cash from investing activities | $(5) | $(441) | | Net cash from financing activities | $47,279 | $14,816 | | **Net change in cash** | **$41,425** | **$10,336** | | Cash, beginning of period | $20,099 | $5,696 | | **Cash, end of period** | **$61,524** | **$16,032** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail business operations, COVID-19 impact, improved liquidity from financing, and key accounting policies for revenue, inventory, and debt [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=21&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS.) MD&A discusses revenue growth from surgical recovery and partner activity, widening losses due to R&D investments, and strengthened liquidity from a public offering [Overview](index=21&type=section&id=Overview) ClearPoint Neuro, a medical device company, focuses on MRI-guided brain surgeries and has incurred significant accumulated deficits from R&D investments - The company's principal product is the ClearPoint system, which enables minimally invasive surgical procedures in the brain under direct MRI guidance[123](index=123&type=chunk) - As of June 30, 2021, the company had an accumulated deficit of approximately **$126 million**[124](index=124&type=chunk) [Factors Which May Influence Future Results of Operations](index=21&type=section&id=Factors%20Which%20May%20Influence%20Future%20Results%20of%20Operations) Future results are primarily influenced by the unpredictable impact of the COVID-19 pandemic, particularly on elective surgical procedures - The COVID-19 pandemic led to the postponement or cancellation of elective surgical procedures, which historically represent about **80%** of procedures using the ClearPoint system[126](index=126&type=chunk) - The impact of new COVID-19 variants, like the Delta variant, is unpredictable and could result in the reinstatement of business restrictions, adversely affecting the company[126](index=126&type=chunk) [Key Performance Indicators](index=22&type=section&id=Key%20Performance%20Indicators) Key performance indicators show significant increases in functional neurosurgery case volume and biologics partners, reflecting pandemic recovery Key Performance Indicator Changes | Indicator | Q2 2021 vs Q2 2020 | H1 2021 vs H1 2020 | | :--- | :--- | :--- | | Case Volume | +96% (249 vs 127) | +50% (463 vs 308) | - The number of biologics and drug delivery partners increased from approximately **20** as of June 30, 2020, to approximately **35** as of June 30, 2021[130](index=130&type=chunk) - The number of Active Surgery Centers was over **60** as of June 30, 2021, comparable to the prior year, with the lack of growth attributed to the COVID-19 pandemic[129](index=129&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Revenue increased due to surgical recovery and partner growth, but rising operating expenses, especially R&D, led to wider net losses [Comparison of Three Months Ended June 30, 2021 and 2020](index=24&type=section&id=Three%20Months%20Ended%20June%2030%2C%202021%20Compared%20to%20the%20Three%20Months%20Ended%20June%2030%2C%202020) Q2 2021 revenue increased due to resumed surgeries, but operating expenses, particularly R&D, surged, resulting in a significantly wider net loss Q2 2021 vs Q2 2020 Financial Results (in thousands) | Metric | Q2 2021 | Q2 2020 | % Change | | :--- | :--- | :--- | :--- | | Total revenue | $3,413 | $2,478 | 38% | | Gross profit | $2,290 | $1,676 | 37% | | Research and development costs | $2,123 | $812 | 161% | | Net loss | $(3,743) | $(1,661) | 125% | - The increase in revenue was primarily due to a **74%** increase in functional neurosurgery navigation and therapy revenue, reflecting the resumption of elective surgical procedures that were postponed in 2020 due to COVID-19[145](index=145&type=chunk) [Comparison of Six Months Ended June 30, 2021 and 2020](index=25&type=section&id=Six%20Months%20Ended%20June%2030%2C%202021%20Compared%20to%20the%20Six%20Months%20Ended%20June%2030%2C%202020) H1 2021 revenue increased from neurosurgery and biologics, but surging R&D expenses led to a significantly wider net loss H1 2021 vs H1 2020 Financial Results (in thousands) | Metric | H1 2021 | H1 2020 | % Change | | :--- | :--- | :--- | :--- | | Total revenue | $7,443 | $5,593 | 33% | | Gross profit | $4,904 | $3,860 | 27% | | Research and development costs | $3,687 | $1,631 | 126% | | Net loss | $(6,281) | $(3,716) | 69% | - Biologics and drug delivery revenue increased **39%** to **$3.0 million** for the six-month period, driven by higher product and service sales related to customer-sponsored clinical trials[159](index=159&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) Despite historical losses, liquidity significantly improved with a public offering, providing sufficient capital for at least the next twelve months - On February 23, 2021, the company completed a public offering of common stock, raising net proceeds of approximately **$46.8 million**[171](index=171&type=chunk) - Management believes that cash and cash equivalent balances at June 30, 2021, are sufficient to support operations and meet obligations for at least the next twelve months[172](index=172&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK.) Market risk is primarily interest rate sensitivity on investments and variable-rate debt, with foreign currency risk currently not material - The company's primary market risk is interest rate sensitivity on its investments and variable-rate debt[185](index=185&type=chunk) - The **$10.0 million** First Closing Note has a LIBOR floor of **2.00%**, mitigating risk from rising interest rates while LIBOR is below that level[187](index=187&type=chunk) - Foreign currency risk is not currently material as sales are predominantly in U.S. dollars[188](index=188&type=chunk) [Controls and Procedures](index=29&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES.) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2021[189](index=189&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2021, that materially affected, or are reasonably likely to materially affect, internal controls[190](index=190&type=chunk) [PART II – OTHER INFORMATION](index=30&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) Part II covers legal proceedings, risk factors, equity sales, and exhibits, providing additional context beyond the financial statements [Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) No legal proceedings were reported during the period - None[193](index=193&type=chunk) [Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors were reported - There have been no material changes to the risk factors disclosed in the 2020 Form 10-K[195](index=195&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities were reported during the period - None[197](index=197&type=chunk) [Exhibits](index=31&type=section&id=Item%206.%20Exhibits) The report includes various exhibits, such as the 2021 Employee Stock Purchase Plan and CEO/CFO certifications - Exhibits filed with the report include the company's 2021 Employee Stock Purchase Plan and certifications from the CEO and CFO[205](index=205&type=chunk)

Company Overview - ClearPoint Neuro operates as both a biologics & drug delivery company with a potential market exceeding $1 billion, expecting its first indication in 2022 [4] - The company also functions as a medical device company with an existing market opportunity of over $500 million, anticipating more than 5 new products in the next 2 years [4] - In 2020, ClearPoint Neuro's revenue reached $12.8 million [5] - The company's gross margin stands at 67% [5] Biologics & Drug Delivery - The estimated market opportunity for gene therapy using the ClearPoint platform is $1.5 billion [15] - Specific indications targeted include AADC Deficiency (~$12 million), Friedreich's Ataxia (~$60 million), Angelman Syndrome (~$72 million), and Parkinson's Disease (~$1.2 billion) [15] - Other indications include Huntington Disease, Diffuse Intrinsic Pontine Glioma (~$20 million), Multiple System Atrophy (~$90 million), ALS (~$120 million), and Glioblastoma (~$2.4 billion) [15] Neuro Navigation (DBS) - The total current addressable U S market for Deep Brain Stimulation (DBS) navigation is $72 million [19] - The DBS market is experiencing a growth rate of 10% [19] New Therapy Devices - The total current addressable market for Laser Therapy in Epilepsy and Tumors is $360 million, growing at 20+% [22] Financial Performance - Estimated FY21 revenue is $17.5 million [28, 29]

Financial Data and Key Metrics Changes - Total revenue for Q2 2021 was $3.4 million, an increase of $0.9 million or 38% compared to $2.5 million in Q2 2020 [7] - Gross margin for Q2 2021 was 67%, slightly down from 68% in Q2 2020 [11] - Cash and cash equivalents totaled $61.5 million as of June 30, 2021, compared to $20.1 million at the end of 2020, primarily due to a public offering [15] Business Line Data and Key Metrics Changes - Functional neurosurgery navigation therapy revenue increased 74% to $1.9 million in Q2 2021 from $1.1 million in Q2 2020, driven by the resumption of elective surgical procedures [8] - Biologics and drug delivery revenue rose 19% to $1.4 million in Q2 2021 from $1.2 million in Q2 2020, attributed to the re-establishment of clinical trial timelines [9] - Capital equipment and software revenue remained stable at $0.2 million for both Q2 2021 and Q2 2020, affected by capital headwinds and delays [10] Market Data and Key Metrics Changes - The company reported a record of 249 procedures covered in Q2 2021, a 98% increase from 126 procedures in the same quarter last year [18] - The company noted potential disruptions in elective procedures due to the COVID Delta variant, particularly in states like Texas and Florida [19] Company Strategy and Development Direction - The company is focused on four pillars of growth: functional neurosurgery navigation, biologics and drug delivery, therapeutic products, and achieving global scale [6] - Recent partnerships with Blackrock Neurotech and adeor are aimed at enhancing the operating room capabilities and expanding product offerings [17][28] - The company plans to continue expanding its biologics and drug delivery partnerships, with a goal of achieving initial commercial gene therapy approval in 2022 [35] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of elective procedures and expects significant revenue growth in the second half of 2021 [44] - The company reaffirmed its revenue guidance for the year, projecting between $16 million and $17.5 million [41] - Management acknowledged challenges due to the COVID Delta variant but noted that most hospitals have resumed operations [84] Other Important Information - Research and development costs increased significantly to $2.1 million in Q2 2021, up 177% from $0.8 million in Q2 2020 [12] - The company has added 50 new employees to support product development and global expansion efforts [15] Q&A Session Summary Question: What are the drivers for sequential growth through year-end? - Management expects significant revenue growth in the third quarter, citing replenishment orders and a record month in July for biologics and case volume [44] Question: How will the Array product be implemented across established sites? - Management believes the Array system will benefit both existing and new customers, particularly for laser ablation procedures [45][46] Question: Update on the biologic approval timeline? - Management confirmed that a partner is still expecting to submit their BLA in 2021, with potential approval in 2022 [48] Question: Progress on site activation in Europe? - Management reported that installations have resumed in Europe, with expectations for additional installations by year-end [55] Question: Direct-to-patient marketing for asleep DBS procedures? - Management is making progress in educating neurologists on the ClearPoint procedure and its applications [59] Question: Interest in new partnerships for global expansion? - Management noted increased interest from European pharmaceutical partners and plans for cautious expansion into Asia [81] Question: Status of clinical trials and new initiations? - Management indicated that most hospitals have resumed trials, with ongoing enrollment expected in the second half of the year [86]

Company Overview - ClearPoint Neuro operates as both a biologics & drug delivery company with a potential market exceeding $1 billion, experiencing 109% growth in 2020 despite COVID-19 [3] - It also functions as a medical device company with an existing market opportunity of over $500 million, anticipating the launch of 5+ new products within the next 2 years [3] - The company's key products are supported by a "razor/razorblade" model, with over 85% of revenue derived from single-use disposables and services [5] Technology and Platform - ClearPoint Neuro's platform leverages live MR imaging for real-time guidance and confirmation with sub-millimetric accuracy [7] - The ClearPoint 'Maestro' Brain Model, jointly developed with Philips, enables point-based correspondence across multiple subjects and serves as the foundation for future navigation tools [9] - The ClearPoint platform is compatible with all major MRI scanner brands, including Siemens, Philips, and IMRIS [13] Market Opportunities and Growth Strategy - The company estimates a $1.5 billion market opportunity in biologics & drug delivery, targeting indications like Glioblastoma, Parkinson's Disease, and Huntington's Disease [17] - In Neuro Navigation (DBS), the total current addressable U S market is $72 million (6,000 cases x $12,000/case), with a 10% growth rate [22] - The total current addressable market for ClearPoint Neuro Laser Therapy is $360 million (20,000 cases x $18,000/case), growing at a rate of 20+% [28] - The company's 4-pillar growth strategy aims for a potential addressable market of over $1 billion by 2025, targeting over 150,000 procedures per year [34] Financial Performance - The company's estimated FY21 revenue is $17.5 million [36] - Procedure volume has grown at a 33%+ CAGR from 2013-2019 [37] - In 2021, Biologics and Drug Delivery revenue is estimated at $5 million, Capital and Software at $7.4 million, and Functional Neurosurgery at $3.6 million [35]

●● ..... ..... ●● CLEARPOINT® NEURO WHEN YOUR PATH IS UNCLEAR, WE POINT THE WAY." Nasdaq: CLPT May 2021 Forward Looking Statements Statements herein concerning the Company's plans, growth and strategies may include forward-looking statements within the context of the federal securities laws. Statements regarding the Company's future events, developments and future performance, as well as management's expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statement ...

Financial Data and Key Metrics Changes - Total revenue for Q1 2021 was $4 million, an increase of 29% from $3.1 million in Q1 2020, reflecting a growth of $0.9 million [6][5][4] - Gross margin decreased to 65% in Q1 2021 from 70% in Q1 2020, primarily due to a higher contribution of service revenue in the previous year [10] - Cash and cash equivalents increased to $64.9 million as of March 31, 2021, compared to $20.1 million a year earlier, largely due to a public offering [13] Business Line Data and Key Metrics Changes - Functional neurosurgery navigation revenue increased by 10% to $1.9 million in Q1 2021 from $1.7 million in Q1 2020, driven by the resumption of elective surgical procedures [7] - Biologics and drug delivery revenue surged by 61% to $1.7 million in Q1 2021 from $1 million in Q1 2020, attributed to the resumption of clinical trial activities [8] - Capital equipment and software revenue rose by 31% to $0.5 million in Q1 2021 from $0.3 million in Q1 2020, reflecting a partial recovery in hospital capital equipment acquisition [9] Market Data and Key Metrics Changes - The company reported a significant increase in case volume, with 214 cases covered in Q1 2021, exceeding the prior estimate of 190 to 200 cases [14] - The company anticipates revenue for the full year 2021 to be in the range of $16 million to $17.5 million, with case volume expected to be between 900 and 1000 cases [23] Company Strategy and Development Direction - The company is focused on four pillars of growth: functional neurosurgery navigation, biologics and drug delivery, ClearPoint owned therapeutic products, and achieving global scale [4] - The FDA clearance for the Array navigation system is a significant milestone, with plans for a limited market release in the second quarter of 2021 [15] - The company aims to expand its presence in Europe and has successfully obtained CE Mark for several products, indicating readiness for compliance with new European MDR guidelines [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of elective procedures and the return of case volumes to pre-pandemic levels [14] - The company is preparing for potential commercial launches in 2022, with ongoing support for multiple partners [31] - Management acknowledged challenges related to capital equipment timing and the initiation of new pharma trials, which could affect revenue recognition [24][25] Other Important Information - Research and development costs increased by 91% to $1.6 million in Q1 2021, reflecting investments in expanding product lines and international compliance [11] - General and administrative expenses rose by 30% to $1.7 million in Q1 2021, primarily due to increased insurance and occupancy costs [12] Q&A Session Summary Question: Insights on the uptick in biologics and drug delivery revenue - Management noted that the increase was driven by the resumption of clinical trials and preclinical work, including toxicology studies [28] Question: Guidance on biologics and drug delivery disposables - Management indicated that revenue can be choppy due to milestone payments and large orders, but expects stabilization as more partners are added [29] Question: Status of commercial launch preparations - Management confirmed ongoing preparations for commercial releases, with expectations for a 2022 launch [31] Question: Importance of SmartFrame Array FDA clearance - Management emphasized that the SmartFrame Array allows for a more integrated workflow in both operating rooms and MRI suites, expanding market opportunities [39] Question: Details on the D&K Engineering partnership - Management clarified that the partnership focuses on automating mundane parts of procedures to improve efficiency and precision [44] Question: Revenue and EBITDA margin targets for the next few years - Management refrained from providing specific targets but indicated a base growth of 15% to 20% annually, with potential for larger revenue-driving milestones [70][72]

Revenue Performance - Total revenue for the three months ended March 31, 2021, was $4,030,000, representing a 29.3% increase from $3,116,000 for the same period in 2020[22] - Product revenue increased to $3,162,000, up 45.0% from $2,179,000 in the prior year[22] - Service and other revenue decreased to $868,000, down 7.4% from $937,000 in the same period last year[22] - Revenue from functional neurosurgery navigation and therapy disposable products was $1,917,000 in Q1 2021, up from $1,742,000 in Q1 2020, indicating an increase of about 10.0%[75] - Biologics and drug delivery revenue totaled $1,660,000 in Q1 2021, compared to $1,029,000 in Q1 2020, reflecting a significant increase of approximately 61.3%[75] - Capital equipment and software revenue reached $453,000 in Q1 2021, up from $345,000 in Q1 2020, marking an increase of about 31.3%[75] Financial Losses - Operating loss for the three months ended March 31, 2021, was $(2,181,000), compared to $(1,209,000) for the same period in 2020[22] - Net loss for the three months ended March 31, 2021, was $(2,538,000), compared to $(2,055,000) in the prior year[22] - The net loss for the three months ended March 31, 2021, was $2.538 million, compared to a net loss of $2.055 million for the same period in 2020[28] - Cash flows from operating activities resulted in a net cash outflow of $2.131 million for the three months ended March 31, 2021, compared to a net cash outflow of $2.331 million for the same period in 2020[28] - The cumulative deficit at March 31, 2021, was $122 million, reflecting ongoing net losses since inception[37] Cash and Assets - Cash and cash equivalents increased to $64,858,000 as of March 31, 2021, from $20,099,000 at December 31, 2020[19] - Total assets as of March 31, 2021, were $74,263,000, significantly up from $29,518,000 at December 31, 2020[19] - The company reported cash and cash equivalents of $64.858 million at the end of the period, up from $16.976 million at the end of the previous year[28] - As of March 31, 2021, the company had approximately $60 million in bank balances exceeding insured limits, indicating a concentration risk in cash and cash equivalents[67] Liabilities and Debt - Total liabilities increased to $30,281,000 as of March 31, 2021, compared to $27,141,000 at December 31, 2020[19] - As of March 31, 2021, the Company had $17.5 million of principal outstanding under the 2020 Secured Notes, with a one-percent increase in one-month LIBOR resulting in an annualized increase in interest expense of $0.175 million[168] - Scheduled principal payments for notes payable as of March 31, 2021, totaled $25.1 million, net of unamortized financing costs and discounts[97] - The Company repaid the 2010 Secured Notes in full, amounting to approximately $2.8 million, along with accrued interest of approximately $0.9 million[96] Stock and Compensation - Weighted average shares outstanding for the three months ended March 31, 2021, were 18,852,828, compared to 15,438,276 for the same period in 2020[22] - The Company had outstanding stock options totaling 1,389,192 shares with a weighted average exercise price of $8.46 and an intrinsic value of $21.5 million[109] - The Company has unrecognized compensation expense of approximately $1.8 million related to outstanding stock options and shares of restricted stock, expected to be recognized over a weighted average period of 2.16 years[110] - The Company has 1,005,111 shares remaining available for grants under the 2013 Incentive Compensation Plan as of March 31, 2021[106] Operational Impact - The company has been impacted by COVID-19, which has led to a reduction in elective surgical procedures, historically representing about 80% of the procedures using its ClearPoint system[35] - The company has sufficient cash and cash equivalent balances to support operations for at least the next twelve months[44] Accounting and Reporting - The company adopted a new accounting standard effective January 1, 2021, which may affect the accounting for convertible instruments and contracts in its own equity[71] - Remaining performance obligations related to capital equipment and software-related service agreements amounted to approximately $0.6 million at March 31, 2021, expected to be recognized within the next three years[84] - The company recognized approximately $0.1 million in capital equipment and software-related service revenue during Q1 2021, which was previously included in deferred revenue[77] Financing Activities - The company raised approximately $46.785 million from a public offering of common stock in February 2021[43] - The Company completed a public offering of 2,127,660 shares at a price of $23.50 per share, resulting in net proceeds of approximately $46.8 million after deducting underwriting discounts and commissions[102][103] - The company incurred $0.1 million in financing costs related to the issuance of the 2020 Secured Notes, which were included in accounts payable[29] Depreciation and Receivables - The company recorded depreciation and amortization of $15,000 for the three months ended March 31, 2021, down from $58,000 in the same period of 2020[28] - The company experienced a decrease in accounts receivable by $123,000 during the reporting period[28] - One customer accounted for 14% of accounts receivable at March 31, 2021, highlighting a significant concentration risk in customer accounts[68]

Part I [Business](index=7&type=section&id=Item%201.%20Business) ClearPoint Neuro develops MRI-guided neuro-navigation platforms for minimally invasive brain surgeries, emphasizing recurring revenue from high-margin disposable products - The company's core business is the ClearPoint system, a neuro-navigation platform for minimally invasive brain surgeries performed under MRI guidance, primarily for deep brain stimulation (DBS) electrode placement and laser catheter insertion[35](index=35&type=chunk)[36](index=36&type=chunk)[39](index=39&type=chunk) - A key growth area is the biologics and drug delivery segment, where its SmartFlow cannula is used by approximately **25 pharmaceutical partners** in clinical trials to deliver therapies directly to the brain, bypassing the blood-brain barrier[37](index=37&type=chunk)[45](index=45&type=chunk)[74](index=74&type=chunk) - The business model focuses on generating recurring revenue from high-margin disposable components, with reusable hardware sold at lower margins or placed under evaluation programs to drive adoption and use of disposables[66](index=66&type=chunk) - As of March 18, 2021, the company had **67 full-time employees**, with **22 in R&D**, **27 in sales/clinical support**, **13 in manufacturing/QA**, and **5 in administration**[144](index=144&type=chunk) - The company holds a significant intellectual property portfolio with **65 U.S. patents** and over **30 U.S. patent applications**, either wholly-owned, co-owned, or licensed[78](index=78&type=chunk) - Customer concentration is notable, with the five largest hospital customers accounting for **35% of functional neurosurgery disposable revenue** in 2020, and one biologics/drug delivery partner accounting for **60% of that segment's revenue**[73](index=73&type=chunk)[74](index=74&type=chunk) [Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including COVID-19 impacts, market acceptance, supply chain reliance, customer concentration, historical losses, competition, and regulatory hurdles - The COVID-19 pandemic poses a significant risk by causing the postponement or cancellation of elective surgical procedures, which historically represent approximately **80% of the procedures** using the ClearPoint system[147](index=147&type=chunk) - The company faces market acceptance risk, as physicians and hospitals may be slow to adopt the ClearPoint system due to the procedural shift from the operating room to the MRI suite, cost considerations, and existing practice patterns[150](index=150&type=chunk) - Significant customer concentration exists, with one pharmaceutical customer accounting for **28% of total revenues** in 2020, and the five largest hospital customers representing approximately **36% of functional neurosurgery navigation revenues**[162](index=162&type=chunk) - The company has a history of incurring losses since its inception in 1998, with a cumulative net loss of approximately **$120 million** through December 31, 2020, and may require additional funding to sustain operations[188](index=188&type=chunk)[191](index=191&type=chunk) - Reliance on single-source suppliers for many components of the ClearPoint system creates risks related to pricing, availability, quality, and potential production disruptions[166](index=166&type=chunk)[167](index=167&type=chunk) - The medical device market is highly competitive, with competition from large, well-established companies like Medtronic, Brainlab, and Zimmer Biomet that have substantially greater financial and marketing resources[90](index=90&type=chunk)[181](index=181&type=chunk) [Unresolved Staff Comments](index=44&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - Not applicable[282](index=282&type=chunk) [Properties](index=44&type=section&id=Item%202.%20Properties) The company's principal executive office and operations are located in a leased facility of approximately 7,400 square feet in Irvine, California, with the lease expiring in September 2023 - The company leases approximately **7,400 square feet** of space in Irvine, California, for its principal executive office and operations, with the lease expiring in September 2023[283](index=283&type=chunk) [Legal Proceedings](index=44&type=section&id=Item%203.%20Legal%20Proceedings) The company states that it is not aware of any material pending legal proceedings to which it is a party - The company is not aware of any material pending legal proceedings[284](index=284&type=chunk) [Mine Safety Disclosures](index=44&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[285](index=285&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=45&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) ClearPoint Neuro's common stock trades on Nasdaq under "CLPT", with 20.7 million shares outstanding, and no plans for future cash dividends - The company's common stock is traded on the Nasdaq Capital Market under the symbol "**CLPT**"[289](index=289&type=chunk) - As of March 18, 2021, there were **20,672,779 shares** of common stock outstanding[289](index=289&type=chunk) - The company has never declared or paid cash dividends and does not anticipate doing so in the foreseeable future[290](index=290&type=chunk) [Selected Financial Data](index=45&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is not applicable as per the report - Not applicable[292](index=292&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=46&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Total revenues increased 14% to $12.8 million in 2020, driven by service revenue growth, leading to a $6.8 million net loss, with liquidity significantly improved by financing Comparison of Financial Results (Years Ended Dec 31) | Metric (in thousands) | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | **$12,829** | **$11,217** | **14%** | | Product Revenues | $8,789 | $9,796 | (10)% | | Service Revenues | $4,040 | $1,421 | 184% | | **Gross Margin** | **71%** | **65%** | **-** | | R&D Costs | $4,686 | $2,810 | 67% | | **Net Loss** | **$(6,782)** | **$(5,540)** | **22%** | - The decrease in product revenue was primarily due to the COVID-19 pandemic, which caused postponement of elective surgeries that historically represent about **80% of ClearPoint system case volume**[298](index=298&type=chunk)[327](index=327&type=chunk) - Biologics and drug delivery revenues grew **109% to $5.0 million**, driven by a **302% increase in service revenue** from a related-party customer supporting their clinical trials[328](index=328&type=chunk) - The company's cash position increased significantly to **$20.1 million** at year-end 2020 from **$5.7 million** in 2019, primarily due to net proceeds of **$24.3 million** from the issuance of secured convertible notes[338](index=338&type=chunk)[354](index=354&type=chunk) - Net cash used in operating activities increased to **$7.8 million** in 2020 from **$2.8 million** in 2019[348](index=348&type=chunk) - Subsequent to year-end, in February 2021, the company completed a public offering with net proceeds of approximately **$46.8 million**, further strengthening its capital resources[345](index=345&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=54&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable as per the report - Not applicable[359](index=359&type=chunk) [Financial Statements and Supplementary Data](index=54&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for 2020 and 2019, noting a significant $46.8 million public offering in February 2021 Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $20,099 | $5,696 | | Total Assets | $29,518 | $11,927 | | Total Liabilities | $27,141 | $7,341 | | Total Stockholders' Equity | $2,377 | $4,586 | Consolidated Statement of Operations Highlights (in thousands) | Account | Year Ended Dec 31, 2020 | Year Ended Dec 31, 2019 | | :--- | :--- | :--- | | Total Revenues | $12,829 | $11,217 | | Operating Loss | $(6,220) | $(4,594) | | Net Loss | $(6,782) | $(5,540) | | Net Loss Per Share | $(0.43) | $(0.42) | - A significant subsequent event occurred on February 23, 2021, when the company completed a public offering of common stock, raising net proceeds of approximately **$46.8 million**[569](index=569&type=chunk)[570](index=570&type=chunk) - In January and December 2020, the company issued secured convertible notes for aggregate proceeds of approximately **$24.3 million**, net of costs[341](index=341&type=chunk)[453](index=453&type=chunk)[454](index=454&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=54&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[361](index=361&type=chunk) [Controls and Procedures](index=55&type=section&id=Item%209A.%20Controls%20and%20Procedures) As of December 31, 2020, management concluded the company's disclosure controls and internal control over financial reporting were effective, with no material changes - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2020[363](index=363&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2020[365](index=365&type=chunk) - No material changes in internal control over financial reporting were identified during the year ended December 31, 2020[367](index=367&type=chunk) [Other Information](index=55&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[369](index=369&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=56&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2021 annual meeting proxy statement - Information is incorporated by reference from the definitive proxy statement to be filed for the 2021 annual meeting of stockholders[372](index=372&type=chunk) [Executive Compensation](index=56&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation information is incorporated by reference from the 2021 annual meeting proxy statement - Information is incorporated by reference from the definitive proxy statement to be filed for the 2021 annual meeting of stockholders[375](index=375&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=56&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership details for beneficial owners and management are incorporated by reference from the 2021 annual meeting proxy statement - Information is incorporated by reference from the definitive proxy statement to be filed for the 2021 annual meeting of stockholders[376](index=376&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=56&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the 2021 annual meeting proxy statement - Information is incorporated by reference from the definitive proxy statement to be filed for the 2021 annual meeting of stockholders[377](index=377&type=chunk) [Principal Accounting Fees and Services](index=56&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Principal accounting fees and services information is incorporated by reference from the 2021 annual meeting proxy statement - Information is incorporated by reference from the definitive proxy statement to be filed for the 2021 annual meeting of stockholders[378](index=378&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=57&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section provides a comprehensive list of financial statements, schedules, and exhibits filed with the Form 10-K report - This item lists the financial statements filed under Item 8 and provides a detailed index of all exhibits filed with the annual report[381](index=381&type=chunk)[383](index=383&type=chunk)

Financial Data and Key Metrics Changes - ClearPoint Neuro reported total revenues of $12.8 million for the year ended December 31, 2020, a 14% increase from $11.2 million in 2019 [8] - The company achieved a gross margin of 71% in 2020, up from 65% in 2019, primarily due to a shift towards higher-margin service revenues [12] - Cash and cash equivalents increased to $20.1 million at the end of December 2020, compared to $5.7 million at the end of 2019, largely due to the issuance of senior secured convertible notes [18] Business Line Data and Key Metrics Changes - Functional neurosurgery navigation and therapy revenue decreased by 12% to $6.3 million in 2020 from $7.1 million in 2019, impacted by COVID-19 [9] - Biologics and drug delivery revenue surged by 109% to $5 million in 2020, up from $2.4 million in 2019, driven by a 302% increase in biologics and drug delivery services [10] - Capital equipment revenue fell by 10% to $1.5 million in 2020 compared to $1.7 million in 2019, as many hospitals postponed capital equipment acquisitions due to the pandemic [11] Market Data and Key Metrics Changes - The company expects to return to pre-COVID case volumes in the second half of 2021, as hospitals begin to reopen and schedule cases again [26] - Case volume for Q1 of 2021 is projected to be between 190 to 200 cases, an increase from 175 cases in Q4 2020 [26] Company Strategy and Development Direction - ClearPoint Neuro is focused on a four-pillar growth strategy, which includes expanding its biologics and drug delivery services, enhancing functional neurosurgery navigation, developing therapeutic programs, and pursuing global expansion [20][33] - The company aims to innovate with a cadence of annual product releases, including a next-generation SmartFrame Array and partnerships with Blackrock Microsystems and Philips [27][29] - ClearPoint is also looking to facilitate earlier engagement with pharma partners to enhance service revenue potential [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to pre-COVID case volumes and highlighted the importance of the rapid deployment of vaccines [5] - The company noted that while COVID-19 has impacted case volumes, it has also provided opportunities to develop new partnerships and expand service offerings [6][21] - Management anticipates multiple new clinical trials to be initiated in 2021 as COVID-19 fears subside [22] Other Important Information - Research and development costs increased by 67% to $4.7 million in 2020, reflecting investments in personnel and collaborative research [12] - Sales and marketing expenses rose by 13% to $5.4 million in 2020, primarily due to increased compensation costs [13] Q&A Session Summary Question: Additional color on the move into the operating room and margin profile differences - Management clarified that not all procedures will migrate to the operating room, and the focus will be on simpler procedures where less troubleshooting is needed [37] Question: Insights on the Philips Maestro brain model partnership - The new system is expected to significantly reduce analysis time from 14-20 minutes to under 1 minute, enhancing peri-procedural applications [44] Question: Overhead expectations for expanding biologics and drug delivery segment - Management indicated that they will partner with existing companies for translational services rather than building in-house capabilities [48] Question: Potential for negotiating royalties in clinical trials - Management confirmed they are exploring opportunities for milestone payments and royalties in early-stage partnerships [71] Question: Barriers to increasing DBS market penetration - Management identified patient anxiety about awake procedures as a significant barrier and emphasized the need for education on advancements in technology [80]